The Australian Charities and Not-for-profits Commission Bill 2012, Australian Charities and Not-for-profits Commission (Consequential and Transitional) Bill 2012 and the Tax Laws Amendment (Special Conditions for Not-for-profit Concessions) Bill 2012 were all introduced in the House of Reps on Thur 23.8.2012.
The Australian Charities and Not-for-profits Commission Bill 2012 will establish a new independent statutory office, the Australian Charities and Not-for-profits Commission (ACNC) which will be the Commonwealth level regulator for the not-for-profit (NFP) sector. The Bill will also establish a new regulatory framework for the NFP sector. The ACNC will commence operations on 1 October 2012. The ACNC is designed to be a “one-stop shop” for ACNC registration, tax concessions, and accessing Australian Government services and concessions. Registered entities that are involved in a range of activities would only have to apply and report to the ACNC.
The ACNC Consequential and Transitional Bill provides transitional registration arrangements that will apply to enable certain entities endorsed or eligible under Div 50 of the ITAA 1997 to be registered entities under the Bill. However, once transitioned, all registered entities will then be subject to the ongoing requirements of the ACNC in order to remain registered and charities that are not registered with the ACNC will not be eligible to continue to receive Commonwealth tax concessions from 1 October 2012. Under the transitional registration arrangements, entities that are endorsed (as charities, PBIs, religious institutions) by the ATO prior to the commencement of the ACNC will be taken to be registered entities under the ACNC on the commencement of the ACNC.
The Transitional Bill also provides for a statutory review of the ACNC legislation. This is designed to ensure that 5 years after the commencement of the Bill, the Minister must appoint a person to review the operation of the ACNC Bill and the ACNC Consequential and Transitional Bill.
The Tax Laws Amendment (Special Conditions for Not-for-profit Concessions) Bill 2012:
- re-states the “in Australia” special conditions for income tax exempt entities, ensuring that they generally must be operated principally in Australia and for the broad benefit of the Australian community (with some exceptions);
- standardises the other special conditions entities must meet to be income tax exempt, such as complying with all the substantive requirements in their governing rules and being a “not-for-profit” entity (with some exceptions);
- standardises the term “not-for-profit”, replacing the defined and undefined uses of “non-profit” throughout the tax laws; and
- codifies the “in Australia” special conditions for DGRs ensuring they must generally operate solely in Australia, and pursue their purposes solely in Australia (with some exceptions, such as overseas aid funds and some environmental organisations).
DATE OF EFFECT: The Tax Laws Amendment Bill will commence from Royal Assent, and will apply to determine whether an entity is entitled to be income tax exempt or remain income tax exempt for income years following Royal Assent, and to determine whether an entity is entitled to be a deductible gift recipient or remain a deductible gift recipient for income years following Royal Assent. Changes to the FBT provisions apply to FBT years of tax following Royal Assent.
All 3 Bills have been referred to the Senate Community Affairs Legislation Committee for inquiry and report by 12 September 2012.
[LTN 163, 23/8]
*Charities and NFP Bills – House committee recommends passage of when introduced
The House of Reps Economics Committee has recommended that, when they are formally introduced, the House pass the Australian Charities and Not-for-profits Commission Bill 2012 and accompanying Australian Charities and Not-for-profits Commission (Consequential and Transitional) Bill 2012 to establish a new national regulator for the charity and non-profit sector. The Bills are currently in draft form. The report includes a dissenting report by the Opposition members of the Committee.
Committee chair, Julie Owens, on Wed 15.8.2012, tabled the Committee’s report on the Bills which, in addition to recommending the House pass the Bills, proposed 10 recommendations to improve the legislation, including:
- explicitly including the reduction of red tape in the objects to the Bills;
- clarifying and redrafting the provisions dealing with the obligations, liabilities and offences of directors, trustees, and management committees;
- strengthening protection in the Bills for those who wish to keep their philanthropy private;
- providing additional flexibility to allow parts of the sector to develop their own governance standards, and then incorporating these standards into regulation;
- providing the Commission with the discretion to accept material prepared for other agencies and levels of Government as reports under the reporting framework for a limited period;
- providing additional detail in the explanatory memorandum of the meaning of “public trust and confidence” and the way it might be interpreted; and
- providing for a review of the legislation and its operation after 5 years.
[LTN 157, 15/8]